The Hong Kong Securities and Futures Commission (SFC) plans to approve more licenses for crypto exchanges by the end of the year. However, these exchanges must undergo stringent checks to ensure full regulatory compliance.
SFCās Strict Licensing Framework
The SFC introduced a licensing framework that crypto exchanges must adhere to. This framework includes essential requirements such as anti-money laundering (AML) measures, investor protection, and secure asset custody.
Deficiencies Found in Some Companies After Inspection Period
Following a five-month inspection period, the SFC found that some digital asset trading companies going through the approval process failed to meet key requirements, especially regarding client asset custody and security practices.
Based on these reviews, three exchanges ā OSL, Hashkey, and HKVAX ā received full licenses. Eleven other exchanges, including Crypto.com, received preliminary licenses and must resolve specific deficiencies.
Positive Impact on Hong Kong's Reputation
The new licenses are expected to enhance Hong Kongās standing as an international hub for
#Cryptocurrencies . SFCās Executive Director for Intermediaries, Dr. Eric Yip, stated that regulatory feedback is beneficial for exchanges, and exchanges are willing to allocate resources to address identified issues. According to Yip, regulation encourages the digital asset market to operate within the law, which supports broader digital asset adoption.
Hong Kong Shifts Toward a Friendly Approach to Digital Assets
Crypto regulation has long been a divisive issue. In the past, Hong Kong was not very welcoming to digital assets due to concerns over their volatility, investor risks, and money laundering.
After the unlicensed crypto exchange JPEX defrauded over 2,600 people of approximately $105 million, the Hong Kong government began taking measures to protect citizens. Currently, Hong Kong is making a strong bid to become a global center for digital assets.
The SFC has become one of the regulators with a comprehensive approach to digital assets, and Hong Kong is positioning itself as a pioneer. One example is the introduction of crypto ETFs, launched in Asia just three months after similar products in the United States.
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